by Ian Harvey
October 12, 2020
Datadog stock continues to thrive during the pandemic because it helps companies make the transition that are trying to automate operations and track key business metrics in order to support employees working from home.
As well, Stock Options Made Easy “Armchair Trader Members,” as of last Friday were up potential profits of 411% on a call trade that was executed on August 10; but expires on October 16.
And on Thursday last week we placed another call options trade on DDOG that has a longer expiry date - this trade is already up 77%.
Shares of the monitoring and analytics platform specialist again jumped higher on Friday, rising about 10% after already climbing 22.3% in September.
Datadog is a top dog among tech stocks in 2020. Shares are up about 185% this year as of October 09, 2020. The S&P 500 has returned about 7.5% over this period.
Why The Continued Momentum…..
To understand more about why Datadog’s upward movement is occurring read the recommended trade on August 10, 2020…..and also, here is the trade recommended last Thursday…..
As you are aware that Datadog has been very good to us, quickly providing a 100% return within a short period of time, and for those members that continued to hold after this time, as of yesterday, the trade was up 320%.
For members that have joined us since we executed this trade you can read about it HERE.
.....it would seem to be an appropriate time to keep the momentum running whilst the stock is running so strongly.
Datadog's stock recently hit an all-time high after the company announced a strategic partnership with Microsoft (NASDAQ:MSFT).
Microsoft will integrate Datadog's dashboard, which helps companies analyze their full infrastructure, into its cloud platform Azure as a "first-class service." This means companies can set up Datadog automatically on Azure instead of manually migrating their data.
This certainly sounds like another big win for Datadog, which has nearly quadrupled in value since its IPO last September.
Many large companies host their data across a wide range of servers, cloud services, apps, and software services. Monitoring all that data simultaneously can be difficult, so Datadog's platform breaks down the silos and pulls the fragmented data onto a single dashboard.
Over 400 platforms, including Cisco's Meraki, Amazon's (NASDAQ:AMZN) cloud-based tools, and Microsoft's Active Directory, already support Datadog's software "out of the box" -- which means they're ready to feed data to its dashboard.
The software-as-a-service (SaaS) company provides real-time analytics and monitoring services that help ensure companies are putting their best foot forward, digitally speaking, and that their cloud-based operations continue without a hitch.
That's not all. In addition to monitoring servers, databases, tools, and services, the artificial intelligence algorithms can spot anomalies and predict failures, and notify customers before they go critical, resulting in costly outages.
Customers are clamoring for the security Datadog provides. In the second quarter, revenue grew 68% year over year to $140 million and the company also generated its second consecutive quarterly profit, a rarity among high-tech companies that are only about a year old.
Datadog's rapidly growing customer base is a key component of its success, up 37% year over year. Even more impressive was the increase of enterprise customers contributing in excess of $100,000, which grew to 1,015, up 71%. At the same time, existing customers are spending significantly more, as evidenced by its dollar-based retention rate of 130% -- meaning existing clients are spending 30% more now than they did a year ago.
Datadog's revenue rose 83% to $362.8 million in 2019, but its net loss widened from $10.8 million to $16.7 million. In the first half of 2020, its revenue rose 77% year-over-year to $271.3 million, and it squeezed out a GAAP profit of $6.8 million, compared to a loss of $13.4 million a year earlier. On a non-GAAP basis, it posted a profit of $36.5 million, compared to a loss of $12.3 million a year ago.
Datadog's total number of customers with annual recurring revenue of at least $100,000 grew 71% year-over-year to 594 at the end of the second quarter. It also recently added one-click integration to Amazon Web Services (AWS), the world's largest cloud infrastructure platform.
Datadog expects its revenue to rise 56%-58% for the full year, and to post non-GAAP earnings of $0.11-$0.13 per share, compared to a loss of $0.01 per share in 2018. Analysts expect its revenue and non-GAAP earnings to rise 35% and 25%, respectively, next year.
The Microsoft Connection.....
Locking in Microsoft's Azure, the world's second-largest cloud platform clearly complements Datadog's integration with AWS and other cloud services. It also reduces the threat of direct competition from Microsoft and Amazon's own cloud infrastructure monitoring tools.
By strengthening its ties to Azure and AWS, Datadog can widen its moat against other high-growth rivals like Splunk and Elastic, as well as diversified tech giants like Cisco and IBM.
Corey Sanders, Azure's corporate VP, declared Azure was the "first cloud to enable a seamless configuration and management experience for customers to use partner solutions like Datadog." However, that statement also suggests Microsoft is leaving the door open for similar deals with Datadog's rivals -- so investors shouldn't mistake this "strategic partnership" for an exclusive deal.
The company was already thriving prior to the pandemic, but accelerating adoption of the cloud has kicked that into overdrive.”
The September Jump.....
Datadog stock's strong September performance is due, in part, to a continuation of the upward momentum it's enjoyed for some time because of being a long-term beneficiary of the COVID-19 pandemic, which "has illuminated the need to be digital-first," as Datadog CEO Olivier Pomel put it in his remarks in the company's second-quarter 2020 earnings release.
But the major catalyst for Datadog in September was a strategic partnership with the technology giant, Microsoft.
On Sept. 30, shares of Datadog jumped 12.4% after the company announced a deal with Microsoft. Under the terms of the agreement, "Datadog will make its cloud monitoring and security platform available to users of the Microsoft Azure cloud computing console. ... Azure users will be able to implement the monitoring service into their own cloud infrastructure."
Customers of Datadog include Airbnb, Walt Disney's 21st Century Fox division, AT&T and FedEx.
Datadog reported second-quarter results on Aug. 6 that beat estimates. The company reported an adjusted profit of 5 cents per share, vs. expectations of a 1-cent loss; Revenue jumped 68% to $140 million, topping views of $135.4 million.
"Our execution was strong during challenging times, including continued platform adoption," Chief Executive Olivier Pomel said in a conference call with analysts. "While we are pleased with our execution in the quarter, we did experience some impact to the rate of usage growth of our customers related to the microenvironment."
Analysts are showing optimism with Barclays analyst Raimo Lenschow, who has an overweight rating on the growth stock, increased his 12-month price target for Datadog shares from $107 to $126. This reflects the analyst's expectation for upbeat news from U.S. enterprise-facing software companies when they report their latest quarterly results during earnings season. Lenschow says his industry channel checks point to an improving environment for information technology (IT) spending.
"COVID-19 has illuminated the need to be digital-first and agile, as well as the cloud as the IT architecture of choice to achieve these outcomes," said Datadog CEO Olivier Pomel in the company's second-quarter earnings release.
Datadog is a leader in cloud monitoring, and should be able to keep growing its market share in cybersecurity, according to Berenberg analyst Kingsley Crane.
Where Is Datadog Stock Price Headed Now?
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Will Datadog Stock Price continue to Rise?
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